Scaling Up Startup Cashflow
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This document provides strategies for achieving cashflow success for startups. It discusses key financial metrics like total addressable market, revenue, costs of goods sold, gross profit, operating expenses, reinvestment, net cashflow, and cash in bank. It emphasizes the importance of timing of cash flows. Specific tips include choosing a large growing market, aiming for 10% market share, having a high digital gross profit margin, reducing the cash conversion cycle, keeping operating expenses low initially through outsourcing, and combining network effects with low reinvestment for scalability. The overall message is that cash flow, not profits, ultimately determines a startup's success.
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Scaling Up Startup Cashflow
- 1. Hello.
- 7. CFO +CFI (+CFF) Net Cashflow Cash In Bank Total Market x Market Share Revenue -COGS Gross Profit -OPEX - Reinvestment Net Cashflow Cash In Bank
- 8. Total Market Mo. 1 Mo. 2 Mo. 3 ... Mo. 24 x Market Share Revenue -COGS Gross Profit -OPEX - Reinvestment Net Cashflow Cash In Bank
- 10. Total Market x Market Share Revenue -COGS Gross Profit -OPEX - Reinvestment Net Cashflow Cash In Bank Does size really matter? 1. Large is good; Growing fast is better 2. TAM, SAM, SOM (common C331 mistake) 3. 4 types of market by Steve Blank
- 11. How much will you grab ? Total Market x Market Share Revenue -COGS Gross Profit -OPEX - Reinvestment Net Cashflow Cash In Bank 1. Networking effects, winner-take-all 2. Type of market determines market s hare
- 12. Rev = Price x Volume Total Market x Market Share Revenue -COGS Gross Profit -OPEX - Reinvestment Net Cashflow Cash In Bank 1. Price is the story of your persona and competition; value is what you get, price is what you pay 2. Volume is an operational metric 3. Top-down and bottom-up are complementary
- 13. Roar that biz engine! Total Market x Market Share Revenue -COGS Gross Profit -OPEX - Reinvestment Net Cashflow Cash In Bank Physical Digital Gross Profit Margin Digitality Spectrum 0% 50% 100%
- 16. Timing of your cash flows is everything (1). Inventory Purchased & Received Inventory Sold CCC= DIH + DSO - DPO DSODIH DPO CCC Cash Received Cash Paid
- 17. Timing of your cash flows is everything (2). Amazon "manages to hold inventory for 28.9 days plus 10.6 days to collect receivables or 40 days in total but then pays accounts payable in 54 days thus achieving a negative cash conversion cycle for Amazon.com of -14 days. "
- 18. Hatred allowed. Total Market x Market Share Revenue -COGS Gross Profit -OPEX - Reinvestment Net Cashflow Cash In Bank 1. Kill rent and salaries. Transform your business model. 2. Productivity of OPEX, GP per Marketing sales, anyone? 3. Outsource early on, insource later
- 19. How much should you pay to remain relevant? Total Market x Market Share Revenue -COGS Gross Profit -OPEX - Reinvestment Net Cashflow Cash In Bank
- 20. What Have We Learned So Far?
- 21. 1. Choose a Total Market that is big and growing fast like AI and Advanced Machine Learning, from $420Mln in 2014 to $5.05Bln in 2020 2. Plan to grab Market Share of 10% and a winner take-all mentality via networking effects, like Uber 3. Score high on the digitality spectrum, and plan for a GP Margin of 80%+ 4. Remember the CCC rules, always find ways to get paid before you pay. Adopt a customer funding mindset 5. Aim for OPEX at 20% of Revenue, and reduce it initially by outsourcing 6. Combine networking effects and low reinvestment rates to set yourself up for scalability 7. Aim for the upside, protect the downside. Observe the 20% rule of costs and revenue.
- 22. CIMITYOM* *Cash Is More Important Than Your Own Mother
- 23. Thank You! Feel free to connect with me on: @AzarSamer samer@altcity.me